RECOMMENDATION

Registration of the charitable trusts

The first recommendation that can help to improve the administration of charitable
NPOs and trust in Malaysia is related to the registration of the charitable trusts. It is
recommended that the Trustee Act 1949 is to be amended in a way that the trustee of the
charitable trust is able to register the trust with an appropriate regulatory body that governs
such matters. This action of registration of charitable trust will help to ensure the proper
administration. Moreover, registration of charitable trust also will safeguard the interest of
the beneficiaries. It should be made a compulsory act for the registration of charitable trust
in Malaysia by following the concept of registration in Singapore and United Kingdom. This
is necessary in order to promote accountability when managing the trust funds, as well as to
monitor an supervise through registration. Also, valuable important information can be
collected for the intention of recording all the available charitable trust in Malaysia with the
purpose to know the exact amount of trust funds.

In term of the burden of duty to register, it is recommended that the settlors, trustees
or representatives of the charitable trust should have the responsibility to make sure that the
charitable trust is registered. This is a concept that follows the approach that has been taken
by New Zealand under the Charities Act 2005. Moreover, it is also suggested that there ought
to be an amendment in the Trustee Act 1949 that allows the trustee to delegate the duty of
registering the charitable trust to the settlor or any representatives from the charitable body.
This leniency can help to make sure that any rigidity in registration of trust can be reduced
in order to encourage registration that only requires a simple process of registration.

Other than that, it is suggested that the eligibility of registration of the charitable trust
should be imposed. For starter, the charitable purpose must be in accordance to the law of
Malaysia. Next, there must be sufficient public benefit and eligibility to register will only be
applied to charitable trust constituted in West Malaysia only. The reason is because both
States in East Malaysia have their own law governing the charitable trust.1 Nevertheless,
charitable trust formed in Sabah and Sarawak may register with their respective laws but still
can enjoy tax concession available in the East Malaysian law without registering with the
national register.

1
Sabah Foundation Enactment 1966 and Sarawak Charitable Trusts Ordinance 1994.
 In respect to the mode of registration of charitable trust, the approach that has been
taken by the United Kingdom can also be a reference as it is also quick as mention under the
Charities Act 2011. This is because the procedure is not so complicated as compared to the
current procedures. The procedure of registration can be as simple as a couple of steps.
Firstly, the founder must ensure that he or she set up the charitable trust and to make sure
that all the requirement to do so is fulfilled. Secondly, the trust instrument in the form of a
trust deed is mandatory whereby the trust deed may include all the relevant information
regarding the administration of the charitable trust. Thus, we recommend that by registering
the charitable trust with the national register, only then can tax concessions be applied. This
approach is taken by all the selected countries in the comparative analysis and it is ideal
approach for Malaysia to follow accordingly. This is because to ensure that only the reliable
charitable bodies certified by the regulatory body can enjoy such benefit.

The establishment of a regulatory body for the administration of charitable trust

The next area of improvement that can be made is in regards to the establishment of
a regulatory body for the administration of charitable trusts. In relation to the setting of a
regulatory body, it is suggested that Malaysia should follow the structure of Charity
Commissions in United Kingdom which is a corporate body. The regulatory body should
have Commission’s member that is appointed by the Minister and should have their own
Executive Management. The corporate body then shall be answerable only to the
government. The suitable model available in term of administrative structure is the
Suruhanjaya Syarikat Malaysia (SSM) on the reason that the body carries the same function
as the Registrar of the Companies which is supervising the regulation of the company’s law
in Malaysia via Companies Act 2016. Thus, it is in the opinion that these similar functions
carried out by the Suruhanjaya Syarikat Malaysia may be followed when establishing a
regulatory body governing the charitable trust in Malaysia. It is suggested that the said body
is called ‘Lembaga Amanah Kebajikan Malaysia’. The used of the name ‘Lembaga’ connotes
a corporate body, ‘Amanah Kebajikan’ means the charitable trust and, ‘Malaysia’ implying
the application of the regulatory body in a Federal level.

Moreover, it is highly recommended that the members of the said Lembaga Kebajikan
Malaysia which will be appointed by the Minister must be of those with legal backgrounds,
especially in regards to matter to the law of trust. The selected members of the regulatory
body can also be those who had contributed and have experience in Malaysia’s social welfare
development. This action of picking these selected members is to ensure that they have the
required expertise and determination in order to encourage the public to institute a proper
administration of the charitable trust.

In the respect of fulfilment of its function, Lembaga Amanah Kebajikan Malaysia

must be given a certain degree of powers in order to regulate the charitable trust. It is
suggested that the regulatory body’s main duty is to ensure the maintenance of a national
register for charitable trust. This duty can be seen as a requirement to ensure that the public
can simply refer to the registered charitable trust and would facilitate the trustee to attract
prospective beneficiaries. The system of register can be in the form of computerize system
and subject to the inquiries of the public.

Furthermore, Lembaga Amanah Kebajikan Malaysia can also have an information

powers in relation to acquiring the relevant information of the charitable bodies. This power
is necessary for the regulatory body to ensure that they can carry their duty effectively to
maintain a register with adequate information and that which fulfils their supervisory
function. Administrative power such as to advice the trustee of charitable trust can also be
vested to the Lembaga Amanah Kebajikan Malaysia. The regulatory body should be able to
advice the trustees in any matters relating to administration of trust fund s f it is required to
do so with the purpose to facilitate a better administration of the charitable trust. Next,
Lembaga Amanah Kebajikan Malaysia should have power to act for the protection of the
charitable trust by investigating any misconduct of charitable funds in which the regulatory
body may have a power to remove any trustee that liable if it is expedient to do so. Lembaga
Amanah Kebajikan Malaysia may act on behalf of the beneficiaries to bring the case to the
court in the case if the mismanagement of the fund is occurred with the intervention of the
Attorney-General.